I’m the CEO of Birst, Inc. in San Francisco, where we deliver business analytics on a SaaS platform. I ran analytics for Siebel Systems, where I became intensely aware of the limitations of current enterprise analytics offerings. I want to bring the power of advanced analytics to small and medium businesses that never had access before, as well as easing the reporting and analytics pain of managers everywhere. I love challenging the status quo, and getting smart people into conversations about that. This is my passion, and I hope to make profound and positive changes in the way decisions get made and how business intelligence grows.
I started my career as an investment banker for Morgan Stanley in their New York M&A practice. I earned an MBA from Harvard as a Baker Scholar. I have a BS and M.S. in Electrical Engineering and Computer Science from UC Berkeley where I was a National Science Foundation Fellow and a California Microelectronics Fellow.

Cloud Computing R.I.P?

In the commentary about the recent catastrophic crash of Amazon’s cloud computing network, it was hard to miss both an elevated level of harshness and a barely suppressed exultation.

Just to quickly summarize what happened: the East Coast wing of Amazon’s massive cloud server network, EC2, which handles the operations of many high tech companies such as Reddit and Bizo, crashed in the early morning hours of April 21st, causing several days of outages for the company’s many important corporate clients. The crash seems to have been caused by human error during a performance upgrade of the system . . . and Amazon had to offer ten days of free service to its afflicted customers.

Needless to say, Amazon was hugely embarrassed, its clients angry. . . and both the trade and mainstream press was filled with both extensive analyses of the flaws of cloud computing and endless angry comments from readers. It was a debacle for Amazon (hence the expensive restitution) and a PR catastrophe for the until-now triumphant cloud computing industry.

And that was exactly the plan.

To an outside observer, the harsh comments probably seemed like thoughtful analysis about the dangers of entrusting your vital data to some outside service like Amazon. But those of us inside the industry saw something else at work: the age-old struggle of corporate IT departments to protect their turf.

Once upon a time, the Brahmins of corporate IT were the most powerful people on the organization chart outside of executive row – and sometimes they trumped even them. They ran hugely expensive data processing departments filled with multi-million dollar computers, and they performed a kind of black magic that nobody else in the company understood but whose pronouncements they ultimately had to serve. IT departments held that power because, ultimately, they were the gatekeepers for all of the company’s information – initially accounting and R&D, but in time marketing, manufacturing, HR and sales – and that conferred on them almost infinite power.

The zenith of corporate power for IT departments was the 1970s, when the information for all of these corporate functions finally came under their control . . . and even CEOs bowed before them. It was a good time to be a corporate computer guy.

But then along came the personal computer and all of those other smart devices that have empowered individuals – and at least to IT departments, it’s been downhill ever since. Not that there haven’t been victories: every few years, after the decentralization of computing power goes too far and companies again fear the loss of control over their valued and proprietary data, there is always a retrenchment and a re-empowerment of the IT department: MIS, client-servers, CRM, server farms . . . all have been short-lived victories for corporate IT. But, as long as employees were walking around with their laptops and smartphones, untethered to the home office, the golden days of corporate IT would never return.

And then, along came “Cloud Computing”, the biggest and scariest threat to corporate IT ever devised. At least all of those other technological challenges had threatened around the edges. But cloud computing stabbed right at the heart of corporate IT with its message that companies don’t need to have their own centralized hardware, that they can instead, more cheaply, powerfully and efficiently, park that information out in the vast picobytes of the Web – or more specifically, in the gigantic server farms created by Amazon, Google and others for their own purposes.

Needless to say, it was a scary idea at first for most companies. There was the ever-present fear of losing control, of being hacked, of crashing. But, ultimately, those fears were outweighed by the enormous cost savings, the easy scalability, and – it must be said – the relief for most execs of not having to deal with internal IT.

And what these companies quickly discovered, to their pleasure, was that the cloud provides an unparalleled restructuring of information service delivery. It allows those who specialize in application development and delivery to focus on it and create huge economies of scale.

As with most non-core business functions, many companies were slowly coming to the realization that their core competency was not in writing software or running computers. Rather their expertise and their fundamental competitive advantage came from a better knowledge of their industry, processes, skill set and the people around the products they actually deliver. Needless to say, this was a lesson their IT departments didn’t want them to learn.

To these IT folks with a vested interested in the Old Way of managing and controlling data, the Amazon crash surely must have come as a long dreamed-of blessing. For the last five years, IT folks have gritted their teeth as cloud computing has not only become more popular and less expensive, but also begun to differentiate into niche industries. Now, you could choose between economy cloud and first-class cloud, and soon everything in-between. And better yet, no matter which service you chose, it was likely to provide better service and value than doing it yourself. It began to look like the end of corporate IT.

And then came the crash.

Not surprisingly, the loudest condemnation of Amazon’s failure came not from its customers, but from IT ‘experts.’ Their argument was what you might predict: All technology must stay within an organization’s four walls. That is, put all corporate information back under our control where it belongs. They couldn’t use greater efficiency to bolster their argument anymore, since internal operations (when fully burdened with personnel costs, benefits, and overhead) really can’t compete with specialized and focused outsourcing. Nor could they argue for greater efficiency: companies long ago learned how difficult it is to police their internal technology organizations using non-technology professionals.

No. Corporate IT has now been reduced to a single argument for its survival: fear. “Your data isn’t safe.” “What if there is a disruption?” “Can you really trust outsiders with your proprietary information?” Those were the refrains. No one seemed to notice that, in reviewing security breaches and major outages over the last few years, the vast majority are committed by organizations running these operations themselves. It was a welcome coincidence that, just a few days later, Sony, which ran its own internal IT operations, suffered one of the biggest data security breaches in business history. And even worse, to this day, Sony does not know or will not say what the hackers got in terms of their customers’ financial information! So much for the safety and control argument.

Is cloud computing perfectly safe? Of course not; and the Amazon mess proves it. But it is cheaper, more efficient and more scalable – and at least as safe – as corporate computing. Best of all, because it is being built and run by dedicated operations, it has the commitment and capital to place itself in a virtuous cycle of constant improvement and learning from its mistakes. Airline flight isn’t perfectly safe either . . . but it is a whole lot safer than it was fifty years ago, not least because it embarked on a similar program of constant improvement. We don’t refuse to fly because it is only 99.99 percent safe; by the same token, we shouldn’t run away from cloud computing because of the increasingly rare occurrence of an EC2-like crash in the years to come.

Whether the detractors like it or not, cloud computing is the future of corporate information management. Companies that shy away from this competitive advantage because they’ve read some dubious ‘analysis’ are making a terrible and costly mistake. Embrace the future; leave the corporate IT guys to live in the past, dreaming of the age when mainframes ruled the earth and they were Pharisees . . .

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.